VIDEO: CONFERENCE PROPERTY INSURANCE - in a connected world

22 April 2021 — Alexandra GUZUN
The COVID-19 crisis made and continues to make the headlines since the beginning of 2020. Yet, as the worst pandemic ever is expected to lose its intensity in the months to come, there are pre-existing grave topics on the agenda that are far from losing ground and are equally far from finding an all-encompassing solution.

The conference will address the increasing impacts of extreme weather risks, focusing on the role that the latest technologies may play in helping the industry deal with the current and future challenges, thus better serving its customers.





Samantha COOK, Senior Financial Sector Specialist, World Bank Crisis and Disaster Risk Finance presented the findings of an Analysis of the fiscal and economic impact of disasters in EU Member States that will be published in June,2021. She stated:" The objective of the report is to trying quantifying the macro-fiscal impacts of natural disasters within the EU. Disasters can have sizeable micro-fiscal impacts in the EU and within the low-liability scenario, without taking into account the disaster risk finance, liabilities can be as high as 0.5% of GDP for each year. In the high-liability scenario, this can basically go up cu 1% of GDP, as it is the case for Cyprus. Regarding the funding gap, across the 27 member states of EU the losses can be as high as EUR 50 billion for every sever events. We also fund that there is very little finance on hands to manage those risks, in fact is so little that on average it can only cover less than 4% of total government liabilities each year."
 
She also added: "The funding gap analysis suggests that incentivizing insurance to encourage a higher uptake by households can halve government liabilities to EUR 50 billion for every extreme scenario and reduce them to EUR 10 billion for smaller events. Also, EU instruments might be insufficient even though they cover only a small fraction of response costs by design."

Hrvoje PAUKOVIC, Managing Director, Croatian Insurance Bureau discussed about what happened in Croatia last year on natural hazards terms: "The total estimated damages are EUR 16.9 billion, damages of the earthquake that hit Zagreb in March 2020 represent EUR 11.4 billion, which is about 60% of the annual state budget. The earthquake that hit us in December 2020 amounted to EUR 5.5 billion of damages. But what disappoints is the claims paid by the insurers. We paid claims immediately, resolve them and help a lot of people along with numerous donations to public hospitals, as well to the people. However, damages paid by April 2020 amounted EUR 50.4 million. 

He added: "Significant portion of property in Croatia is not adequately insured or is not insured at all. The contribution of the insurers in compensation of damages arising from earthquake could have been more significant if a larger number of institutions/companies/citizens had adequate insurance coverage.  When we compare insurance density in Croatia with the EU in terms of property, we can see a large discrepancy: on average, Croatia spends around EUR 50 per capita, while the EU standard is more than three times higher. The same situations go for health insurance, life and motor insurance. The ratio between premium and GDP in Croatia is 2,6% on the insurance penetration. This is the answer way the number of properties has not been insured proper."

Nicoleta RADU, CEO, PAID Romania has also commented on the Romanian level of insurance protections for NatCat: " Romania is one of the most exposed country to three catastrophic risks: earthquake, landslide and floods and Romanian Pool was setup to provide a simple insurance product to secure their homes against the risks. This product aims to be a social protection for the Romanian population, but also to take the burden of the state using public budget for indemnifying population in case of NatCat. This mandatory system is based on a public private partnership. The goal is to have all the Romanians protected with this insurance. 

"At this stage we have only 20% of people insured. There are various explanations why achieving this goal of having a higher protection does not happened yet: a not satisfactory enforcement of the law, a lack of financial education, a lack of trust in insurance system. PAID's strategy is to reach 40% penetration in a medium term."

Alexandru CIUNCAN, General Director, UNSAR comment upon the fact that Romanians are too optimistic to consider NatCat insurance: "We should not try to change how we react, but we should try as industry to educate people in positive way, we should do our best in order to inform them better by explaining what are the products and tools they disposed in order to protect themselves." 

"The last annual survey we have made in October 2020 showed that 59% of Romanians are concerned about fires, while earthquake sits on the second position with 54% and severe weather is the third risk which concern them. Also, there is a perception study that showed 74% of all participants were interested in buying a home insurance policy, in comparison with 71% in 2019. So, we can see increase in the perception towards household insurance. There were also, a number of increases at the end of 2020 in terms of gross written premiums even though they are marginal. The market is moving, but of course not to the phase that we would all wanted, " said Alexandru.


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